You are scheduled to receive annual payments of $10,000 for each of the next 25 years. Your discount rate is 8.5%. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?
A) $8,699
B) $9,217
C) $9,706
D) $10,000
E) $10,850

Question

Quizplus · Accepted Answer

The difference in present value is calculated by finding the present value of an annuity due (payments at the beginning) and subtracting the present value of an ordinary annuity (payments at the end). The difference is approximately $8,699.

You Are Scheduled to Receive Annual Payments of $10,000 for Each